Half the Land Is Gone: Oregon’s Governor Pulls the Plug on a $5 Billion Salem Data Center Site

Governor Tina Kotek moved Thursday to terminate the state’s pending sale of 32 acres at Salem’s Mill Creek Corporate Center — roughly half the land a California company needs for a proposed data center campus valued at more than $5 billion.

She directed the Department of Administrative Services, which owns the parcel, to end the contract with Verrus. The company said it was caught off guard.

What Was Being Planned

The project, marketed as Oakline at Mill Creek, would occupy about 75 acres in southeast Salem near Turner Road SE and Deer Park Drive SE. Plans describe three buildings plus a utility substation, designed to support artificial intelligence and cloud computing operations.

Verrus is based in California and funded by Google. Its investment figure has been reported at roughly $5.1 billion.

The state-owned parcel Kotek withdrew accounts for about half the footprint. Marion County records show an adjacent parcel of similar size is owned by Scannell Properties, an Indiana-based real estate development and investment firm — meaning the project as drawn is not viable without state land, though the company has other options to explore.

Verrus has not submitted a formal land use application, and no land use approval has been granted.

The Governor’s Reasoning

Kotek’s office said she acted after learning of the proposed development, citing her commitment to managing state assets in a way that advances Oregon’s long-term interests, supports local communities, and aligns with priorities around affordability, responsible economic development and stewardship of public resources.

Her own framing was more direct. The decision, she said, concerns her responsibility to ensure state actions reflect Oregon’s values and serve the public interest.

She was careful to avoid a blanket position against the industry. She said she believes in growing the state’s economy and welcoming new investment including in technology — but that growth has to make sense for the community, the infrastructure and natural resources. Oregonians, she added, have made clear they expect thoughtful decisions about projects of this scale.

Kotek lives in Salem, which has drawn some comment locally.

The Company’s Response

Verrus spokesperson JP Newmann said the company was greatly disappointed and strongly disagrees with the decision.

His central objection was procedural. He said the move was made unilaterally and without consultation, before Verrus had any opportunity to present its design, infrastructure plan and community benefit proposals — the very materials, in his account, intended to address the concerns being raised.

He also argued each project deserves to be judged on its own merits, while acknowledging that community concerns about data centers are real.

Newmann said the company came to Salem specifically to listen and to seek conversation, and that this was why it chose to go public before filing an application rather than after.

Company leadership indicated Verrus still intends to pursue the project in Salem.

The company has been participating in Oregon’s Data Center Advisory Committee and recently presented members with an overview of what it describes as a different model of development — one designed to reduce water consumption, support rather than strain the electric grid, and deliver community benefits. Verrus says there is a better way to build these facilities.

That claim has not been independently evaluated, which is roughly the company’s complaint.

The Meeting That Preceded This

The decision arrived days after a July 27 city council session at which hundreds of residents filled the chambers and testified for hours, overwhelmingly in opposition.

The recurring themes were the familiar ones for large data centers: water consumption, electricity demand and its effect on rates, and strain on local infrastructure.

The city manager subsequently called a special council meeting for Monday, August 3, to consider a moratorium on new data center projects and amendments to zoning codes governing them. A city spokesperson confirmed that meeting will proceed despite the governor’s announcement.

The Economic Argument

Support for the project has come primarily from labour and business interests, and it is not a trivial case.

Garth Finley, representing the Northwest Carpenters Union, told the council the development would bring more than $5 billion in private investment — an amount he characterised as roughly one-third the size of Salem’s entire current taxable property base.

Verrus has proposed 75 permanent high-paying positions plus hundreds of temporary construction jobs.

The ratio in that figure is precisely what makes these projects contentious nationally. Enormous capital investment and substantial property tax base, paired with a comparatively small permanent workforce, and significant demands on power and water.

The Secrecy Problem

A separate controversy concerns how the project stayed quiet for so long.

The city operated under a nondisclosure agreement with Verrus signed in March 2025. It was made public on July 13, 2026, after officials sought release once the company indicated it wished to proceed — and after details had already begun circulating on social media.

State Senator Deb Patterson said the entire conversation happened under what she called a cloak of secrecy, and wants to know who was party to the agreement — the mayor, the city manager, county commissioners, the Department of Administrative Services. The public, she argued, has a right to know how public assets are being used or allocated.

She said she intends to introduce legislation addressing the use of NDAs by elected officials and public employees.

Patterson also made a point worth noting alongside her criticism: Salem, like every community, needs economic development and good-paying jobs, and the state should be helping businesses succeed.

The city’s community planning and development director, Kristin Retherford, defended the practice at Monday’s meeting, explaining that confidentiality agreements allow communities to evaluate potential projects without creating unintended negative consequences — for instance, land speculation or premature disruption when a project may never materialise.

Both positions have merit, which is why the question is likely headed to the legislature rather than being settled locally.

The Wider Policy Track

Kotek convened a Statewide Data Center Advisory Committee in January to develop policy recommendations. It is scheduled to meet Friday and again on August 4 to discuss and deliberate a draft report.

That timing is notable. A decision about a specific site has landed days before a state body is due to consider general rules — which is either responsible caution or getting ahead of a process, depending on where one sits.

Salem is not alone. Local governments across the country have adopted moratoriums on data center construction over the past year while they work out zoning, utility and water questions they were not prepared for.

What Happens Next

Monday’s council meeting proceeds regardless. Verrus says it is still looking at Salem. The state land is off the table for now, and the adjacent private parcel is not sufficient on its own for the project as designed.

The larger question the advisory committee will confront is the one Newmann raised in his statement: whether Oregon evaluates these proposals project by project on their specifics, or sets categorical rules about where and whether they can be built at all.